governance, political economy, institutional development and economic regulation

After security of life and property, the most visceral driver for winning at politics is the provision of jobs. With a job come social standing; an income and continuous honing of skills, ensuring sustained employment through an individual’s life. We aam admis are not wrong in assuming that everything else; education, health coverage, a decent house, a happy life, can all be bought with money in the pocket. How are political parties responding to our concerns?

Frankly they are not. Governments lost direct control over employment post 1990 once the world changed forever with the collapse of the Soviet Union. Suddenly, the gates were opened. Both expectations and ability became benchmarked to highly competitive international standards. It was no longer possible for the traditional silk sari handlooms in Varanasi to survive the competition from power looms in Gujarat or cheap silk imported from China. Industry continues to face the brunt of competition.

Within industry, it is the small and medium enterprises which have become unviable today. Many of their products require vast scale like the incredibly cheap Mumbai vegetarian “thali” (platter) which is viable only if turnover is high. In India, “scaling up” invites huge transaction costs. It attracts oppressive regulation and social protection measures and is constrained by poor infrastructure. The result is low job creation even in private industry.

Agriculture has for long been fed on the opium of subsidies and high administered purchase price for food grains at the expense of investments, which incentivize our best farmland to be used for low value cereals rather than cash crops. Like all opiates, this strategy has prolonged the day of reckoning but not avoided it. Fan, Gulati (Ashok Gulati, India’s best known Agri-Economist) and Thorat lay this bare: ‘Investments, Subsidies and Pro-Poor Growth in Rural India’, Agricultural Economics 39, 2008.

Banking on the service industry to provide the boost in jobs is like banking on hot money inflows to correct the foreign exchange deficit in the trade account. Services are the sunrise sector but it is also highly susceptible to global economic shocks. Jobs in services (tourism, hospitality, finance, IT, health care) are easily transferable to the most competitive international location.

Providing jobs in today’s world is an international concern, not just in India. But the manner in which we are going about managing the problem is pathetic.

The present government’s quick-fix formula was to enhance government spending for temporary work in rural areas, where joblessness is most acute. Certainly a decent temporary measure, but clearly not fiscally sustainable in an economy which is moving towards a leaner government. We borrow to finance even our recurrent expenditure today. Only a “too big to fail” economy like the US can sustain such misadventure. More importantly, we are crowding out public investment. How long can we afford to underspend on defence, infrastructure, health and education to finance “band aids” in the name of social protection?

The “quick-fix” mantra for joblessness is to enhance skills and spend more on education, assuming that a highly skilled labour force will enhance competitiveness and pull in more investment and jobs. As a generic solution, both are acceptable. But unless we fashion our education system to make children productive in the modern world, we could end up enlarging the hopelessness of the educated unemployed. We see this already in Punjab and in the North East.

Changing the system of education is not enough. We need to change the structure of jobs available and the social norms incentivizing competiveness. Here are issues against which to benchmark the party you vote for.

First, change the system of education by bringing in flexible curricula permitting choice in subjects and learning curves (the dynamic VC of the Delhi University is a champion and has taken the lead in this). Quick learners should be enabled to leap frog in subjects they are good at and slow learners allowed to learn at their own pace. Better assessment systems to determine “learning” rather than memorizing by rote are necessary. Upgrading teacher skills and compensation is critical. Teachers are the “front line” of the government. They provide multiple services at the lowest administrative level of a ward or a village. There is no reason why their emoluments and benefits should be less than that of comparable civil servants.

We know that learning outcomes are also determined by the home environment of a student. In poor Bihar, students gather around kindly mentors, who help them prepare for the civil service exams. These mentors substitute for a supportive home environment. But it is hard for poor kids to let their potential shine through. It is similarly hard for poor parents to forsake the income from a child begging; rolling bidis; making firecrackers or weaving carpets.

Conditional cash payments are an effective instrument to substitute for the lost income. The government pays parents to keep their children in school. Even in the developed world, availing of student aid to continue studying, is the “Band-Aid” to sit out the recession and resulting joblessness.

Second, learning is driven by job expectations. The government remains the biggest employer today. Its share in employment, relative to the private sector is reducing. But significant sovereign functions, like policing, justice and decentralized administration remain underserved and are legitimate public employment growth areas. Government is also the most accessible employer for the poor and unconnected and recruits on merit and positive affirmation (reservation) policy.

Change the manner in which government jobs are filled and we immediately change learning incentives. Today, the incentive is to cram and learn by rote, with the sole intention of getting high grades in the relevant recruitment exam, which offers entry to life time cadre-based public employment. The choice of subjects is consequently driven by “score potential” in the relevant civil service exams rather than personal interest or the aptitude of the student.

Make government recruitment “position” based and end the cadre based selection system. Select against the narrowly focused job requirements of a specific “position” like Assistant-Trade Development; Sub Inspector-crime investigation; Appraiser-Customs; Development Grant Officer or Executive Magistrate. Potential candidates will immediately self-select potential jobs and equip themselves with the necessary qualification for being: a government accountant; office manager; purchaser; store keeper; HR manager; economist; GP doctor; civil engineer; criminal lawyer; community outreach and media; scientist; or a statistician.

This will also avoid the problem of too many students studying social sciences and too few in science or technology. Do we really need the numbers of History, Political Science, Sociology, English, Sanskrit or Music graduates we produce? Why not limit the number of seats offered in government aided universities for such subjects and enlarge those available for the more job related subjects? Why not make it compulsory for those entering government service to pass a basic speaking and reading test in a regional language of choice, Hindi and English? After all basic communication skills are what an average person needs, to be effective in a multi lingual country.

Third, we must prepare for the dwindling market for low skilled labour in armies, in the police, as household help, or as providers of brawn in industry and agriculture. The “akhara” (wrestling ring) is no longer the place to hone your employability. “Geekiness” is in. Geekiness gives women an immediate comparative advantage since they mature earlier. Given equal opportunities, they outshine men in early academic achievement which remains the best available proxy for value in the workplace.

India cannot compete internationally with one hand tied behind its back. We must change traditional Indian gender based roles. Not an easy task and best done by charismatic leaders who become personal role models like Maggie Thatcher, who convinced the British that women can think and act effectively. Sonia, Bhenji, Didi, Amma and Sushma Swaraj are contemporary Indian role model politicians as are the women (though not enough) in leadership positions in other professions.

The building blocks of social change have to be (1) reservation for women in politics and government jobs; (2) a gender review of our laws and regulations by a Law Commission to weed out negative discrimination against women, as for example in customary law and (3) developing a consensus across religions to weed out iniquitous taboos.

Consider that shockingly, we still practice “gender untouchability”. Women are advised not to visit places of worship when they are menstruating and are barred from the kitchen in traditional, wealthy households. Such “gender untouchability” is at the core of why girls miss or drop out of school more than boys. Menstruating is a lot better than picking your nose or hawking and spitting in public, both of which are socially accepted.

Making work gender neutral is key to using our human resources competitively. Even men, who today have to earn a living, may welcome this once they can discard their false pretensions of being the sole provider and head of the family. The recipe for happier and longer lives for men is spending more time cooking, swabbing or changing diapers. Behind every liberated woman stands a confidant man.

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Comments on: "Political casualties: Jobs, gender & social change" (1)

The contention that employment generation is the most critical requirement for the country is correct. However the most important change required for generating employment is elimination of the right to strike, or at least denying it to employees earning say twice the minimum wage.

Which idiot will put up a 5000 man garment factory or other low tech factory in India where labour makes incredible demands like ESOPs or 50% to 100% salary jumps.

With our current labour laws only a few industries like auto, two wheeler industry, mining etc can have thousands of employees. Employment will only go down if we keep on protecting a few million organised labour while far greater numbers can not get any job.

Tinkering with labour laws is not enough. The right to strike, has to be replaced by the right to sack, if we want industry to put up new factories .